The economy is expanding quite rapidly right now. The unemployment rate has dropped to 4 percent, wages are finally growing at a healthy clip,and stock markets are near record highs. It’s a good time to be in business, and a great time to expand. Many companies are now turning to merchant cash advance (MCAs) and other forms of funding to expand their business.
Still, there are some serious risks. President Donald Trump is looking to reset trade relations with many countries. This could spark a global trade war. Indeed, China, the European Union, Mexico, and Canada are all caught up in a “trade skirmish” with the United States at the moment, leveling tariffs on one another. And now, Trump is threatening tariffs on a further $200 billion worth of Chinese goods, which could spark a genuine trade war.
There are some other worries as well. Some housing markets, such as San Francisco, may be overheated. Some tech stocks may be overvalued, having entered speculative territory. Energy prices are rising. Labor force participation remains a bit below historical norms. On and on the list goes.
Worried? Don’t panic. If you follow the economy enough, you’ll realize that there are always risks. Right now, the United States and indeed the world is enjoying one of the strongest periods of prosperity in the history books. Of course, good times will eventually come to an end. Whether that means next week, next year, or a decade from now, only time will tell. Still, there’s no reason to panic right now.
However, don’t panic doesn’t mean “don’t prepare.” Every business should always be prepared for the tough times that could come. One important step is ensuring that you are maximizing every opportunity in the moment. Get every customer, signup every client, leave no leafs unturned.
In order to tap into opportunities, you may need to access financing. With business financing, you’ll be able to expand your company and market presence. By taking advantage of opportunities now, you can build up your customer base. When the next recession hits, or the trade “skirmish” explodes into a war, more of your customers will be left standing.
By expanding your business now, you can also reel in more revenues. Some of these revenues should be invested, but it’s also a wise idea to build up your cash holdings as well. You don’t want to save too much, otherwise you’ll miss out on investment opportunities. At the same time, your business needs to have an “emergency” fund.
Of course, you should always be careful and responsible when taking out loans. During the financial crisis, many businesses over-leveraged themselves and found themselves in a tight spot during the last recession. That awesome office building Acme Company bought for $1 billion dollars was suddenly worth half that and they couldn’t pay the staff to fill it up anyways.
Many people are turning to merchant cash advances because unlike many loans, the terms are generally short. You get a quick injection of cash, expand your business, and pay for the MCA, often in a matter of months. There’s no messy 30 year repayment plans or anything like that. Further, MCAs are tied to credit card sales. If the recession hits and your sales drop, you’ll pay less.
When the next recession does hit, it’ll be time to buckle down and ride out the storm. Don’t be surprised if banks stop lending. Fortunately, merchant cash advance lenders like us will still be there to help you secure much needed funds.